NIO’s Q1 Earnings Release: Look at the Bigger Picture

  • NIO, the Chinese electric vehicle maker, will likely release its first-quarter earnings tomorrow. The stock tends to be volatile after its earnings release.
  • In this article, we’ll look at the key updates that investors should watch in the company’s first-quarter earnings release.

NIO’s Q1 earnings release

NIO (NYSE:NIO) is expected to release its first-quarter earnings on Thursday. Analysts expect the company to post a net loss in the quarter. However, Bank of America upgraded NIO stock and raised its target price on Tuesday. Overall, analysts have been bearish on the stock. Let’s look at the key metrics that investors should watch during the company’s first-quarter earnings call.

Key metrics in the Q1 earnings release

During the fourth-quarter earnings call, NIO sounded positive about achieving positive vehicle gross margins in the second quarter and double-digit gross margins by the end of this year. Investors should watch the company’s first-quarter gross margins and any possible revision to the gross profit guidance. Also, markets would wait for an update on the second-quarter delivery guidance. During the fourth-quarter earnings call, NIO said that it plans to meet its internal delivery guidance for 2020 despite the pandemic.

NIO stock in 2020

NIO stock has been volatile in 2020. Based on Tuesday’s closing prices, the stock has fallen 5.0% for the year. In contrast, Tesla stock (NASDAQ:TSLA) has gained 96% during this period. While Tesla’s March deliveries were strong in China, its deliveries fell in April. Meanwhile, NIO’s April deliveries looked healthy. Tesla is ramping up production at its China Gigafactory. The company is constructing its next Gigafactory in Berlin. Tesla is planning another plant in Texas.

Tesla and Elon Musk

Recently, Elon Musk threatened to shift Tesla’s headquarters. The company didn’t receive permission to resume production at its Fremont plant. Before the pandemic, Tesla guided for half a million electric car deliveries in 2020. We’ll have to see if the company revises its guidance due to the shutdown at its Fremont plant.

Coming back to NIO’s first-quarter earnings release, management might discuss more details about the agreement with strategic investors, which includes the Hefei municipal government. The capital raise helped the company with much-needed cash to bridge its massive cash burn. NIO might also talk about future capital requirements. Tesla has raised capital this year but it was for its growth pursuits. Read Tesla and NIO Raise Capital for Entirely Different Reasons to learn more.